TG Therapeutics, Inc. (TGTX) Earnings Call Transcript & Summary

All right. So we can get started. I'm Eric Joseph, senior biotech analyst with JPMorgan. And our next presenting company is TG Therapeutics. Presenting on behalf of the company is CEO Mike Weiss. The Q&A session we're doing in the room, there'll be mics circulating around for those who want to ask a question, and you can also submit them in the digital conference book, and I can work them in. So with that, Mike. Thanks.

Thanks, Eric, and thanks, everyone, for joining us this morning. Before I get started, I just mentioned that I probably will be making some forward-looking statements. So I do encourage folks who are interested to review our public disclosure documents available on the Internet and the risk factors that go with those. All right. So let's get started here. We've got exciting news that we announced about 1.5 weeks ago. Ublituximab, is our lead development product is now approved as BRIUMVI for relapsing forms of multiple sclerosis. This is the first and only anti-CD20 monoclonal antibody approved for relapsing forms of MS that offers 2 times per year, 1 hour infusion after the starting dose. So we're pretty excited about that. You can see the beautiful box we now have and the vial that's going to go out. And hopefully, that will be on site as early as early February. So that's the target right now. So we're all working towards getting that done as quickly as we can. I'm going to start out by doing a little background on BRIUMVI, and its differences based on some of the basic science. So BRIUMVI was designed to become a more efficient B-cell depleting agent. And what you can see, for those of you who are hardcore scientists you'll know what an antibody looks like on the right-hand side over here, but it's got 2 sides to it. You've got the binding side with CD20, and you've got the binding side with the immune system. So the design is -- the antibody lands on the B-cell. The other side of the antibody grabs the immune system and you deplete the B cell. There's only one problem. When you manufacture antibodies, when anyone manufacture antibodies, one of the byproducts is the sugar side chains and one particular sugar side chain that's become problematic is fucose. Fucose sits on the Fc domain. This is the side that interfaces with the immune system and blocks the efficient interaction, which inhibits the effective depletion of B cells with BRIUMVI. We have created a manufacturing process that basically develops, produces a low fucose containing antibody. And you could see for a really nice efficient binding, which then leads to B cell depletion. And the goal, of course, of a B cell-depleting agent is to deplete B-cells. So it's kind of a good thing. All right. So that had a little background so you can understand some of the basic science differences between this molecule. The other thing I'll note is that versus other CD20. This is a unique antibody. So it's a protein sequence as unique to us. And the binding site for this antibody is unique as well. So we studied BRIUMVI in 2 large Phase III trials. This is a pretty typical design for multiple sclerosis registration trial. It's compared to a positive control, active control, which here is teriflunomide. We randomized the patients almost 1,100 patients between the 2 studies were randomized. We followed those patients for 96 weeks to the primary endpoint of annualized relapse rate. Relapses are important here. We are treating relapsing forms of MS. So you want to avoid relapses. Relapses can result in temporary and/or permanent disability. So you want to avoid those relapses at all cost. Secondary endpoints include T1 and T2 GAD lesions. These are lesions that are typical of MS patients. You can see them under MRI and also time to disability progression. So the primary endpoint, annualized relapse rate. We're obviously super excited about this data. This has been presented at major conferences and as part of the New England Journal of Medicine publication. But what you can see is against an active control of teriflunomide. BRIUMVI was able to reduce the potential for relapses by about 50% to 60%. So really nice. The actual results themselves the 0.076 and 0.091 were the lowest ARRs ever reported in a Phase III trial for relapsing forms of MS and translate just to give you a sense of what this all means, translate into 1 relapse in every 13 years for 0.076 and 1 relapse in every approximately 11 years for 0.091, so again, very successful on the primary end point. And also very successful on secondary endpoints, particularly the MRI endpoints. Here, we saw dramatic reductions in the typical lesions associated with the disease. And on the disability side, very low disability, slight edge here to BRIUMVI, but for both arms, it was actually very low disability progression, which is, of course, good for patients. So the last efficacy I'm fine to discuss is NEDA or no evidence of disease activity. So NEDA is a really interesting endpoint. It's basically -- it's not in the label, but it's essentially derived from the 4 endpoints I just described to you in the label. So if you have none of the 4 things occur to you, you don't have a relapse, you don't have a new or a [ larging ] T1 or 2T lesion. You don't have a disability progression, you have NEDA, right? And so here, you can see that, again, against an active control of teriflunomide, about 45% of the BRIUMVI patients were able to achieve NEDA versus about 11% to 15% in the control arm. Now what is somewhat typical, and we've presented this in other publications is you rebaseline this NEDA at 6 months. So essentially, you disregard what happened in the first 6 months, and you look at the next, in this case, 18 months through the 96 weeks, they do that because there's a hypothesis that you need the drugs to get on board and start working. So some of those relapses or some of those progression that may occur early on are not necessarily related to the drug. So you rebaseline of 6 months. If you rebaseline the data at 6 months, the BRIUMVI group goes about 80% NEDA and the teriflunomide group goes to about 20% NEDA. So again, pretty dramatic differences. Now the CD20 class, again, if you think about these large numbers of patients who potentially could have no evidence of disease activity and hopefully, that's very prolonged. The concept with the CD20 is perhaps if you can get people started very early, you can arrest the disease process. And so you'll see there's a reason why the CD20s are now the #1 prescribed class of drugs in MS. All right. So let's now flip and talk a little bit about safety. This is a drug. It's a CD20. It depletes B cells. B cells are an important part of the immune system. So without them, you can be subject to infections, which is very common for CD20s reduction in immunoglobulins. This is from the prescribing information and the highlights of that in the warnings and precautions, I do encourage everyone to read the full label. There's a lot of great information in there, of course, and how to -- how providers can safely and effectively deliver the drug. And that can be found on our website or found on briumvi.com, so go check it out. Also, on the safety side, from the label, the most common adverse events here are listed again, very similar to what you saw in the warnings precautions infusion-related reactions, infections. The infection rate is comparable between the 2 groups, the overall infection rate and the serious infections, we were about 5% for BRIUMVI and 3% for teriflunomide. All right. So with that as a background for the drug and the data, again, this is now approved. Let's talk about the market that BRIUMVI will be entering into. So on the left-hand side, this is what I would call the overall market. And on the right-hand side, to me, this is the new market, the fancy people call it the dynamic market, the marketing folks. But this is basically the annual number of shares that [indiscernible] get treated, and this is the overall treated population. So on the left-hand side, we estimate that about 350,000 patients are being treated for their MS and over 100,000 of them are already on an anti-CD20 monoclonal antibody. On an annual basis, again, the dynamic side of this, about 80,000 patients are seeking a new therapy. So that includes patients who were newly diagnosed, but also includes patients that are switching therapies, and it's very active to see switches. So about 80,000. And as currently today, about 50% of those patients are going on to a CD20, which, as I mentioned earlier, makes the anti-CD20 class now the most common disease-modifying therapy for all of relapsing forms of MS. Okay. Drilling down a little further. Now let's look at the dynamics of this CD20 portion of the market. It's a large portion of the market, but there's only 2 other players in the market. So right now, there's one that's a subcutaneous product. It's self-injected once a month. And then there's another product, which is an IV. So the IV is more similar to BRIUMVI. That's also given every 6 months similar to BRIUMVI but unlike BRIUMVI, that is given either a 2-hour infusion for people who can tolerate it or a 3.5 hour infusion. So -- and obviously, we've been talking about BRIUMVI as a 1-hour infusion after the first dose. So again, just drilling down a little bit here. We've got the 40,000, which on the prior side, 80,000 times 50%, pretty simple math. About 40,000 patients are entering the CD20s on an annual basis. About 70% of those patients are choosing the IV form. And what's also interesting to note, about 20% of the folks who do choose subcutaneous we'll drop out within the first year. Now these drugs work quite well. So my hypothesis is not that they're going off because it's not working for them, but that perhaps they didn't want to self-inject or they didn't believe that the once a month is convenient for them as perhaps going to see their doctor once every 6 months. The other thing that's important to note about this area generally is the time on therapy is quite long. The IV, the currently on market IV, we estimate at least about a 4-year possibly longer median duration. So when you think about how this market turns from a dynamic market into a total market share. Every year, there's new patients that will come on to the therapy, but the patients from the prior year, most of them are still on therapy. And so as you move forward year after year, you have most of the patients from the prior year staying on and you keep layering in the patients from the prior years and the new patients. So again, as you start to stack those up, you start to see how the overall market share tends to continue to skew further and further towards the CD20s. So what do we bring into the table in a bit of a summary here. So again, we've talked about the efficacy of this compound. We've talked about the safety profile a bit. Again, much more all this information is available on the label. Let's hone in a little bit on the convenience, the flexibility and the predictability. So twice yearly, 1-hour infusion. We'll show you a little bit of market research. It seems to be a very popular way to receive your CD20. It gives a lot of flexibility to the sites with a 1-hour infusion. And when you layer in the predictability that we haven't talked about yet, knowing that 95% of the patients can get the infusion in 1 hour, gives the sites confidence that they can pretty much deliver this product any time of the day. So what we hear anecdotally from sites is that they schedule their current IV in the morning because they don't know for sure how long it's going to take, and they basically reserve that chair all day. With the confidence of a 1-hour infusion, the sites have the flexibility to schedule when they want, but don't forget the patients. These are folks that maybe want to come in before work. They want to come in their lunch hour, they want to come in after work with a 1-hour infusion that's predictable, we can provide that kind of flexibility. So we think this is very important and it's not just us that thinks that. So this is actually independent research that was done by a group called First Word that's available online. They surveyed 70 KOLs worldwide. And here's some of the stuff that they came up with, again, the top 2 bars impressed with -- generally impressed with the safety and efficacy of the compound. But moving on to the third bullet, about 73% and felt that the 1-hour infusion twice a year was either very compelling or extremely compelling. 84% anticipate prescribing the drug when it becomes available. At about 50% anticipate switching their patients from other CD20s. We've done our own market research in significantly larger groups of physicians, and our results are similarly very consistent with these results. So what else do we have to offer? So I am personally super excited about the way we've priced this compound. So we now -- we have priced it to be the lowest branded disease-modifying therapy that's approved for multiple sclerosis. At [ $59,000 ] that represents somewhere between a 20% discount to the IV CD20, about a 40% discount to the subcu CD20 and obviously, a significant discount across the board. You can see some of these other agents, it's less than half of some of the other approved and used agents to treat MS. So again, we're super excited about this price point. One, we think it has ramifications for the entire MS community in terms of the ability to reduce the overall cost to the health care system for treating MS. We're also very excited about its ability to help patients who sometimes struggle to meet the needs of their -- of paying for their drugs. And finally, we did this with the very intent to show the payers and ensures that this was an important drug that they get to the patients as quickly as possible, that it does save money for them. So our hope is that, that will translate into rapid cover in formulary coverage and formulary. And again, our goal is to make sure that every patient that wants BRIUMVI can get on to BRIUMVI. So I'll get to maybe a somewhat touchy subject for some, for some of you who don't know the company. But look, we're a relatively small company. There's some doubters out there that don't think that TG can effectively launch into MS. Obviously, we think they're wrong. We've got -- we brought in a fabulous team. Our field force is about 80 to 100 strong. These folks are some of the most talented, most experienced and above all, the nicest people that we found in the MS community. They come to us with an average of 12 years' experience in MS, they come to us with an average, think about how many people are talking about an average of 2 launches of major brands in MS. They come with -- to us with vast networks of relationships in the MS community. They are enthusiastic and ready to roll. I spent time in the last few weeks with our East Coast team and our West Coast teams preparing for the launch and doing the educational programs necessary internally to be prepared. And these folks are really excited and really believe firmly in their ability to launch. And this last point about the vast network and relationships is extremely important in MS because it is probably one of the most concentrated markets that you can imagine. So if you recall, I mentioned that about 350,000 patients were being treated for MS. We estimate that about 70% to 80% of those patients are being treated at just 550 centers. I mean, you could not imagine a market design better for a small company to launch successfully in this -- in the category. So the team is ready. They know and they have relationships with a lot of these centers. And so we're excited. We've got a great strategy. We've got a great team, and we're prepared to launch, hopefully, in a few weeks. So just to quickly summarize. We do see BRIUMVI as the next evolution in B-cell therapy. We are super excited, obviously, about the approval and the label, which confirms the efficacy and safety profile of this molecule. We do think we have potentially a best-in-class profile. Again, the annualized relapse rate below 0.10 is a new mark for others to try to achieve. The twice-a-year infusion in 1 hour, the predictability of that 1-hour infusion, all of which we think come together to create a best-in-class profile. On the access side, we really went out of our way to price this to unlock access for patients. Again, we want to make sure everyone that wants BRIUMVI, gets BRIUMVI. So it is the lowest priced branded approved therapy for MS. And we're going to wrap that up again to make sure these patients get on with a really robust patient support program. And the team is launch-ready and experience and ready to go. So I'm going to get to the concluding slide, and we'll get to some Q&A. So our goals for this year are quite simple. We want to get this launch underway as quickly as we can. Again, right now, as we mentioned, targeting early February. And we want to meet our launch objectives, right? Our goal is to do a great job in launching this drug. And like I said, I'll say it like for the fifth time today. We've got a great team in place to do it and I feel very confident in the team and the profile of BRIUMVI to do that. In terms of financials, we ended the year with a pro forma cash of $220 million. So that actually represents $175 million of cash and marketable securities. And also, given the approval before year-end, we also have the ability to draw down another $45 million from our Hercules loan facility. So you put those 2 together, you get about $220 million at the end of the year. We are also, if you include some level of revenues that we expect over the next 18 months we have about 18 months of cash based on that. So we're feeling quite good about our financial position and our ability to use that cash to launch effectively. So with that, we are right on time. I feel good about myself. First time I've ever done that. So we will move on to the Q&A. I'm going to ask Adam Waldman, our Chief Commercial Officer. So I sit up here with us.

Great. And just as a reminder, there should be mics circulating around the room, but I can kick things off. So I guess, how should we think about sort of whether there are there's a low-hanging fruit patient opportunity early on in the launch of the BRIUMVI. I guess are you looking to initially see uptake among new patients to the class or perhaps switches? .

Yes. So I think our going-in hypothesis was always that if you're happy with your current therapy, you're going to stay in your current therapy. So we've built most of our modeling and our projections around competing for that new business. So the new patient starts. So again, I mentioned about 40,000 approximately. 40,000 patients we think we'll be starting CD20s over the coming years in each year. So we expect to compete for that. But I will add the caveat that anecdotally for whatever it's worth, and can't rely too much, but both on survey data and anecdotal data in talking to physicians, it does appear that there are a group of patients that seem like they'd be interested in switching.

There's a submitted question here. You've priced BRIUMVI competitively at a discount -- 20% discount to comps. I guess, what are the incentives, I guess, for the provider? I guess what does it do for their incentives in terms of, I guess, buy and bill. And I guess, broadly speaking, I guess, how do we think of the incentives for the provider of therapy, whether it's buy and bill or, I guess, providing greater -- being able to treat additional patients from the shorter infusion time.

Yes. So the cynical question that came from the Internet, I guess, if the provider potentially can make less money because the actual price is lower, will they use the drug. So I'll let Adam answer the cynical question that came in across the wire.

Yes, sure. So there's a lot of dynamics to consider in the economics of providers, right? So there's the ASP. But there's also a cash outlay. There's also the idea of lowering overall cost depending on the different the types of accounts, right? So an [ IDN ], a health care system or looking to lower cost or private insurance or private neurologists may have a different way to think about it. But we took all those things into account. We believe that we are going to have a positive economic dynamic for physicians. We don't think it's going to be an issue with our pricing. And the pricing does, I think that the overall strategy behind the pricing was to ensure access because if you don't have access, no one can use it, right? So we wanted to make sure we're going to get access and then the physician dynamics and the physician economics will work out based on our interactions with many different types of accounts and many different types of physicians.

Yes. I would just add to that probably the one thing we heard the most was make it easy for us to give it to our patients, and we'll be using a lot of BRIUMVI.

What percentage of the accounts would be more receptive to a lower cost. So let's say, they're not financially [ incented ] by ASP plus. So the less cynical side of that they actually have an expensive to adopt.

Yes. I mean, given all the...

By the way, it's still cynical, right? You're still assuming there is one side that takes a certain position, but continue.

I think it's -- every physician will be interested in our drug. Given the dynamics I laid out, given the efficiency that Mike laid out in his presentation, the increased throughput, the increased predictability and flexibility in the infusion center if these accounts -- most of these accounts that we're talking about are high volumes of CD20 use, they are attached to an infusion center. They have interest in efficiencies and throughput. And all of it taken together balances out to a very positive experience. So I would say it's all the accounts that we're targeting.

Okay. But you can't say like 340B accounts or some specific segments have better financials with a lower list.

No. I think each and every one of these types of accounts have a different way to think about it. But in the way that we price our strategy will be attractive to every one of the ones that we're targeting.

And I guess just to follow up, do you think that you'd be able to announce any like large IDNs that would slot you in first over other CD20s where you get preferential treatment? Or do you not think that's a reality in this market?

Yes. So I'd say we priced to gain access. We didn't price to gain priority. Our goal is always -- has been and will continue to be to get priority access. Some we think that there is a chance. Some people will give us priority access. But as long as we have equal access, the product profile, we think, is what will drive the uptake.

Some of the data that you presented here would seem to support a preference for infusions over subcu administration, given the [indiscernible]. Nevertheless, Roche is also looking at doing an equivalent study with a subcu formulation. I just want to get a sense of how you guys are thinking about additional or I guess, the need for a subcu formulation to overall -- to support the overall brand longer-term?

Yes. So the current IV that you referred to, that is also considering a subcu. Their subcu is not really the same subcu concept as the one that's on the market. So the one that's on the market is subcu to take it home. The one that the other IV company is doing is really to reduce the infusion time, right? So they're going to deliver that on every 6-month basis also. So it will be more comparable to just taking their infusion time down. So we don't know how long it's going to take for them to deliver that subcu, but it will be in the office. It will take more than a minute. I don't know how long it's going to take, but it's going to take some amount of time. They're going to require chair time. But I think it is their technique to try to compete off of our 1-hour infusion. They're not actually going to be competing against the other subcu. Now having said that, is there a potential for us to consider a competitive subcu product to. So we can compete basically in both markets. Really, to me, there's 2 CD20 markets now, right? There's the larger one, which is IV and there's the smaller one, which is still significant, which is the subcu. So could we develop ours as a subcu for self-injection and compete, that's something that we are considering.

Does prophylactic immune support make a difference among providers in terms of deciding between the various IV products?